April Non-Manufacturing ISM Report On Business®

This Contributed Column is brought to you by Business Facilities LiveXChange, the only event that has been designed for corporate executives and business owners who are responsible for their companies' site selection projects. Click here to learn more or register for the invitation-only site selection conference.

Posted by Heidi Schwartz

Economic activity in the non-manufacturing sectorgrew in April for the 40th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business® . The report was issued by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee.

ISM’s Non-Manufacturing New Orders Index grew in April for the 45th consecutive month. The index registered 54.5 percent, a decrease of 0.1 percentage point from the 54.6 percent reported in March. Comments from respondents include: “Implementation of new projects” and “New product placements.”

Employment activity in the non-manufacturing sector grew in April for the ninth consecutive month. ISM’s Non-Manufacturing Employment Index registered 52 percent, which reflects a decrease of 1.3 percentage points when compared to the 53.3 percent registered in March. Ten industries reported increased employment, and six industries reported decreased employment. Comments from respondents include: “Increasing work-force levels” and “Right-sizing the operations to the economy right now.”

ISM’s Non-Manufacturing Inventories Index grew in April for the third consecutive month. The index registered 56 percent, which is 4.5 percentage points higher than the 51.5 percent reported in March. Of the total respondents in April, 26 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Overseas shipments ordered last year are now arriving” and “Increased inventory to support maintenance activities.”

Prices paid by non-manufacturing organizations for purchased materials and services increased in April for the 43rd consecutive month. ISM’s Non-Manufacturing Prices Index for April registered 51.2 percent, 4.7 percentage points lower than the 55.9 percent reported in March. In April, the percentage of respondents reporting higher prices is 22 percent, the percentage indicating no change in prices paid is 68 percent, and 10 percent of the respondents reported lower prices.

ISM’s Non-Manufacturing Backlog of Orders Index grew in April for the third consecutive month. The index registered 51.5 percent, which is 3 percentage points lower than the 54.5 percent that was reported in March. Of the total respondents in April, 39 percent indicated they do not measure backlog of orders.

The seven industries reporting an increase in order backlogs in April — listed in order — are: Construction; Real Estate, Rental & Leasing; Management of Companies & Support Services; Accommodation & Food Services; Professional, Scientific & Technical Services; Public Administration; and Wholesale Trade. The five industries reporting a decrease in order backlogs are: Other Services; Retail Trade; Mining; Finance & Insurance; and Health Care & Social Assistance. Six industries reported no change in backlog of orders for the month of April compared to March.

Backlog of Orders

%Higher

%Same

%Lower

Index

Apr 2013

15

73

12

51.5

Mar 2013

18

73

9

54.5

Feb 2013

18

73

9

54.5

Jan 2013

15

68

17

49.0

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the United States by domestically based personnel grew in April for the fourth consecutive month. The New Export Orders Index for April registered 53.5 percent, which is 3 percentage points lower than the 56.5 percent reported in March. Of the total respondents in April, 69 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The six industries reporting an increase in new export orders in April — listed in order — are: Construction; Information; Management of Companies & Support Services; Accommodation & Food Services; Public Administration; and Professional, Scientific & Technical Services. The four industries reporting a decrease in export orders in April are: Health Care & Social Assistance; Other Services; Finance & Insurance; and Wholesale Trade.

New Export Orders

%Higher

%Same

%Lower

Index

Apr 2013

22

63

15

53.5

Mar 2013

29

55

16

56.5

Feb 2013

29

63

8

60.5

Jan 2013

27

57

16

55.5

Imports

The ISM Non-Manufacturing Imports Index grew in April for the fourth consecutive month. This month’s reading at 58.5 percent is 1 percentage point higher than the 57.5 percent reported in March. Fifty-seven percent of respondents reported that they do not use, or do not track the use of, imported materials.

The eight industries reporting an increase in imports for the month of April — listed in order — are: Finance & Insurance; Public Administration; Retail Trade; Wholesale Trade; Construction; Information; Professional, Scientific & Technical Services; and Accommodation & Food Services. The two industries reporting a decrease in imports for the month of April are: Health Care & Social Assistance; and Transportation & Warehousing. Eight industries reported no change in imports for the month of April compared to March.

Imports

%Higher

%Same

%Lower

Index

Apr 2013

20

77

3

58.5

Mar 2013

21

73

6

57.5

Feb 2013

12

81

7

52.5

Jan 2013

10

82

8

51.0

Inventory Sentiment

The ISM Non-Manufacturing Inventory Sentiment Index in April registered 60.5 percent, which is 1 percentage point higher than the 59.5 percent reported in March. This indicates that respondents believe their inventories are still too high at this time. In April, 27 percent of respondents said their inventories were too high, 6 percent said their inventories were too low, and 67 percent said their inventories were about right.

The eight industries reporting a feeling that their inventories are too high in April — listed in order — are: Mining; Utilities; Wholesale Trade; Arts, Entertainment & Recreation; Information; Public Administration; Retail Trade; and Finance & Insurance. The three industries reporting that their inventories are too low in April are: Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; and Professional, Scientific & Technical Services. Six industries reported no change in inventory sentiment for the month of April compared to March.

Inventory Sentiment

%Too High

%About Right

%Too Low

Index

Apr 2013

27

67

6

60.5

Mar 2013

24

71

5

59.5

Feb 2013

27

71

2

62.5

Jan 2013

33

62

5

64.0

About this Report

The data presented herein is obtained from a survey of non-manufacturing supply managers based on information they have collected within their respective organizations. ISM makes no representation, other than that stated within this release, regarding the individual company data collection procedures. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response, and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The NMI™ (Non-Manufacturing Index) is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the non-manufacturing economy in that index is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

The Non-Manufacturing ISM Report On Business® surveys are sent out to Non-Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on information for the current month. ISM receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM then compiles the reports for release on the third business day of the following month.

The industries reporting growth, as indicated in the Non-Manufacturing ISM Report On Business® monthly reports, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

The Non-Manufacturing ISM Report On Business ® is published monthly by the Institute for Supply Management™. The full text version of the Non-Manufacturing ISM Report On Business® is posted on ISM’s website at www.ism.ws on the third business day of every month after 10:10 a.m. (ET). The next Non-Manufacturing ISM Report On Business® featuring the May 2013 data will be released at 10:00 a.m. (ET) on Wednesday, June 5, 2013.

About The Author

Content Development Expert

Schwartz joined Group C Media in April 1989 as managing editor of Today's Facility Manager. In September 2012, she transitioned to a new role dedicated to developing online content for Business Facilities and Today's Facility Manager (now Facility Executive). Schwartz can be reached at schwartz@groupc.com.

Article archives (by month)

More Real Estate News

Sitemap

About Business Facilities

Business Facilities is a leading full-service media brand specializing in the site selection marketplace. Through a bi-monthly magazine, e-mail newsletters, a news portal, and its LiveXchange event, Business Facilities has created a dynamic community for C-level executives and economic development organizations.